“The judgment shows that universities can’t rely on implied terms that inventions belong to them,” said Kim O’Connell, a partner of Mallesons Stephen Jaques in Sydney.

The university brought the case against Bruce Gray, a professor of surgery who developed a new liver cancer treatment while working for the UWA. He subsequently left his post to set up a company called Sirtex and develop the new technology. Sirtex became a listed company in 2000.

In 2004, UWA sued Sirtex and Gray (who has now left the biotechnology start-up), accusing them of wrongly appropriating the rights to the inventions. Gray and Sirtex cross-claimed.

On April 17 the Federal Court in Perth found against UWA. In a 1,618-paragraph judgment the Court said:

“Absent express agreement to the contrary, rights in relation to inventions made by academic staff in the course of research and whether or not they are using university resources, will ordinarily belong to the academic staff as the inventors under the 1990 Act. The position is different if staff have a contractual duty to try to produce inventions. But a duty to research does not carry with it a duty to invent.”

Merlin Crossley, acting deputy vice-chancellor for research at the University of Sydney, told The Australian newspaper that the ruling was extraordinary.

“We’ve always thought it was self-evident that we’re employing staff to research and learn,” he is quoted as saying.

The UWA tried to rely on its Patents Regulations, made in 1971, and its IP regulations, which it passed in July 1996, but the judge found that the university had not properly promulgated the 1996 regulations or enforced the 1971 regulations.

Although the ruling is bad news for universities, O’Connell said that she doubts whether many would find themselves in the same position now. “Most universities are more focused on IP issues and have better structures for commercialization,” she said.

The judge described the length and complexity of the litigation as “exceptional” and said that, rather than trying to assert their IP rights using contracts, universities would be better advised to offer “highly competent and experienced commercialization services in exchange for a negotiated interest in the relevant intellectual property”.

UWA vice-chancellor, professor Alan Robson, said in a statement that the university had filed the case to uphold its regulations on ownership of patents developed by its staff.

“The university’s course of action was a matter of principle that had important ramifications for the protection of intellectual property and the flow-on benefits of university-initiated research to the broader community,” he said.

A spokesperson for the University of Western Australia told Managing IP that the university is still considering an appeal and that it was too early to say what changes it would be making to its contracts with staff.

Gray and Sirtex were advised by Lavan Legal and DLA Phillips Fox respectively. Jackson McDonald Lawyers represented UWA.